whereas CHAPTER 3: Human Resource Planning:Goals, Trends, and Forecasting
Organizations need people just as they need raw materials, equipment, and other materials in order to function successfully. In fact, it is not uncommon to hear managers acknowledge: "Our people are our most important asset."' Organizations undertake human resource planning to enable them to meet their future "people" needs in the same way in which they plan for their nonhuman resources.
In light of our perspective in Chapter 1, we will define human resource planning as an informationdecisionmaking process designed to ensure that enough competentpeople with appropriate skills are available to perform jobs where and when they will beneeded As such, "it entails defining the organization's human needs for particular positions and assessing the available pool of people to determine the best fit."' The relationship of human resource planning to the other personnel management processes is depicted in Figure 3. 1.
In this chapter we will first make some introductory comments concerning the goals and trends in human resource planning. We will then discuss the basic information necessary for human resource planningjob analysis. We have included the subject of job analysis here because firms must first know the nature of jobs to be filled before they can engage in accurately forecasting either the supply or demand of labor for their organizations. As can be noted in Figure 3.2, before any human resource planning can begin, jobs must first be analyzed and job descriptions and job
Figure 3.1Personnel decision making: human resource planning.
specifications developed. Finally, we will discuss forecasting the internal demand for personnel. In Chapter 4 we will discuss the specifics for determining both the internal and external supplies of personnel available to the organization. In addition, we will consider specific human resource decisions themselves: filling job vacancies and reducing the number of employees when necessary. For example, the 19801982 recession necessitated that firms undertake reductions not only of rankandfile workers, but of middle managers as well. A model of this human resource planning process is shown in Figure 3.2.
Goals and Objectives of Human Resource Planning
Effective human resource planning can help managers meet organizational subgoals as well as wider objectives such as profitability and the needs of employees in the organiza
tion.' For example, effective planning may
1. Serve to stabilize employment levels when demand for a firm's product is variable, thus reducing the firm's unemployment compensation liability costs due to layoffs, providing more job security to the firm's employees, and minimizing the costs of overtime during periods of peak demand.
Figure 3.2Human resource planning model for any particular job at any particular time.
2. Prevent young college recruits from leaving the firm after expensive training programs because they lack opportunities for promotion.
3. Reduce the problems of managerial succession by permitting plans for replacements to be drawn up in advance in case key executives resign or die.
4. Make it possible to allocate financial resources so that departments will have the necessary people to produce the firm's desired output.'
One example of the way in which human resource planning can provide for employment stabilization involves the use of temporary personnel ("temporaries") by organizations. Although such temporaries have been used primarily to fill in for employees when they are on vacation or ill, many businesses are now finding other creative uses for temporaries which can provide cost savings to firms. Guillet has suggested, for example, that planned staffing may result in using temporary sales personnel during the peak Christmas holidays, thereby minimizing costs associated with overtime pay for permanent employees.'
In addition, temporaries may be used "on a longterm basis when employee turnover is high or production low, especially in tedious or routine jobs."' Using temporaries may provide savings not only in overtime costs, but costs associated with absenteeism, employee turnover, and recruitment problems, and savings on other benefits as well.'
Relationship of Planning to Other Personnel Processes
From a systems view, human resource planning is mutually interrelated with many of the organization's other endeavors in personnel management. The strongest relationship exists between human resource planning and selection. In fact, all selection efforts really are an integral part of the whole human resource planning process. Organizations that have either stable or increasing human resource needs must go into the external labor market and hire employees even though they generally follow a promotionfrom within policy, as we will see later.
In addition, human resource planning is related to both performance appraisal and training and development. Performance appraisals can pinpoint the skills that will be required for employees to move into higherlevel positions via promotion, while training and development efforts may then be designed to provide these skills.
To meet organizational goals, human resource planning seeks to ensure that the organization's demand for individuals at any particular time will be just met by available human resources. This view assumes that "stockpiling" employees at levels greater than needed and being understaffed are both undesirable. This assumption represents a major difference between planning for human resources and planning for nonhuman resources. Although it is generally unacceptable to stockpile or build inventories of human resources, organizations may find it necessary or desirable to build up raw materials or finishedgoods inventories.
It is unacceptable to hold human resource inventories for three reasons. First, human resources are costly and it may be difficult to justify the expense of excess personnel. As the previous example of the employment of temporaries indicated, there are sounder and more costeffective options available to personnel planners in business firms. Second, excess people are not engaged in productive work, and are likely to be bored and frustrated by the lack of anything constructive to do. Such boredom and frustration can create problems because excess people may make unnecessary work for productive people and may even inhibit the firm's total productive efforts. Third, since human resources (particularly skilled and professional people) may be in short supply, taking productive workers out of the economy's labor pool may be considered socially unacceptable.'
It is equally undesirable for an organization to operate with too few employees. As with "stockpiled" employees, individuals may feel frustrated, but in this case because of overwork rather than a lack of productive activity. This situation may also be dysfunctional to an organization's goals. Consider, for example, a department store during the holiday season with a shortage of sales personnel. In addition to the frustrations experienced by employees, such understaffing may also result in loss of employee efficiency. Customers may respond to long lines and excessive waiting by taking their business elsewhere, with resultant loss of sales by the organization. Having too many or too few employees may create numerous problems for organizationsproblems that can be reduced or eliminated through effective human resource planning.
Trends in Human Resource Management
Unfortunately, the human resource planning efforts of organizations have often been inadequate by failing to emphasize the truly systematized approach geared toward meeting overall objectives. As Lopez and others have noted:
Some organizations have perceived manpower planning primarily in terms of budgeting to control labor costs; others have viewed it as a management development technique; still others see it as a table of backups and replacements for current employees; and finally, others have viewed it as a means of establishing a human resources informational system and a personnel inventory. Since each of these approaches is necessarily limited in scope, it is a small wonder that the state of the art in human resource planning has limped along quite slowly.9
Toward More Sophisticated Human Resource Planning
In recent years, both personnel practitioners and researchers have emphasized some of the basic facets of personnel decision making that we stressed in Chapter 1: (1) taking systems and contingency approaches, and (2) developing more sophisticated human resource forecasting and planning models. For example, the growth of equal employment opportunity regulations in recent years has increased the awareness of human resource planners of the effects of external changes on personnel systems.
Two observations are in order regarding these more sophisticated approaches. First, more complex planning systems have generally been used in larger firms. Large organizations generally must undertake complex human resource planning and can afford the higher costs of such approaches. Second, although a wide range of human resource models have been developed, some of these models have ignored so many "real life" personnel variables that they have had virtually no practical application. On the positive side, there have been numerous quantitative models that have been very useful to organizations. This chapter will focus on the basic concepts involved in some of these more useful models.
There are a number of reasons for the recent increase in the use of more sophisticated human resource planning models. For example:
Organizations simply have been growing larger and more complex, requiring more sophisticated approaches. This has been especially true in those organizations in which interdependencies have increased."'
The invention and development of the computer has made possible the analysis of complex human resource problems that would previously have been so timeconsuming as to be cost prohibitive or virtually impossible to deal with by manual computations.
"The manpower mix in organizations had gradually come to focus around highly skilled managerial and technical talent."" Such personnel have at times been in short supply, and more of a lead time has been required for their training and development.
Once an integrated, wellthoughtout human resource planning program has been initiated, managers tend to appreciate its benefits and work together with the firm's human resource specialists in developing viable programs"they are more willing to plan in this area, if only they are shown how to begin.""
Problems Inherent in More Sophisticated Human Resource Planning
Despite these reasons for the growth of more sophisticated human resource planning, such approaches have faced a number of problems. First and most obviously, there is an inherent mathematical complexity associated with efforts to model human resource systems. In addition, however, there are two less obvious difficulties: (1) a lack of certainty surrounding human resource needs in the future, coupled with (2) the existence of an acquisition lead time for meeting those needs. Even if an organization's human resource planning experts were completely uncertain about the number of operations researchers that would be needed on July 28, 1998, the organization would face no problems if it could at that future time instantaneously obtain any number of such personnel to meet its objectives."
In actuality, however, lead times are needed to recruit and train new personnel, and to train and promote existing employees for new positions or assignments. Acquisition lead times have become more of a problem in recent years because of the needs for more highly skilled managerial and professional personnel. Since this trend is expected to continue in future years, the problem of acquisition lead times creates forecasting difficulties for most organizations."
Finally, human resource plans must be updated more frequently in firms (or in any of their subsystems) in which greater uncertainty exists. As one observer has noted:
Increasing instability and the greater uncertainties associated with certain job requirements (e.g., research and development or marketing) indicate a requirement for more uptodate information on emerging needs. This manpower data is increasingly subject to change, and organizational needs dictate timely information with appropriate systems support's
Job Analysis
Before engaging in human resource planning, management must first define what work is to be performed and determine how tasks can be divided into jobs. The assignment of tasks to jobs is commonly known as job design.Even after jobs have been defined, however, current information about their content must be maintained. This informationgathering process, called job analysis, serves several useful functions for the organization.
First, since the tasks comprising most jobs will change over time owing to technological innovations or other reasons, job analysis is an ongoing process within the organization. Uptodate job analysis may provide a firm with an indication of when jobs need redesigning because of task content changes. For example, a firm may purchase newer machinery which reduces the time required to perform the tasks comprising the job by 50 percent. When such situations arise (as they do), job occupants may be assigned new additional responsibilities in order to keep them busy in performing a full day's work.
Second, identifying the work to be performed provides the basis for effective human resource planning. Such planning cannot be done properly by management unless it knows fairly precisely what a "sales," "engineering," "receptionist," or any other type of job consists of. For example, a firm may have hired its present receptionist many years ago when the job consisted of operating a telephone switchboard and greeting visitors. With technological innovations such as automated switchboards and display writers, the tasks performed by that receptionist have changed over the years. Ongoing job analysis would identify those new duties, providing a better understanding of the current responsibilities of the receptionist. Thus, should the present receptionist leave, the organization can seek someone truly capable of filling the job.
Relationship of Job Analysis to Other Personnel Functions
Accurately describing what each job entails is essential for the recruitment and selection process. Job analysis results in the development of not only job descriptions butjob specifications as wellthat is, what characteristics the individual needs to possess to be qualified for any given job. For example, in the case of the receptionist, the degree of typing skills needed by an applicant (for example, 30 words per minute or 80 words per minute) would be included in the job specification. This kind of specification enables the firm to engage in sounder recruitment and selection procedures.
Job analysis also provides valuable data for performance appraisal. This is so because supervisors can compare an individual's actual job performance with the tasks required to be carried out as specified in the design of the jobs. In addition, job analysis data provide a basis for training and development efforts in the organization. In order to train individuals to perform particular jobs effectively, we need to define for them (and for the trainers) what tasks employees are expected to carry out.
Job analysis data are also extremely valuable in wage and salary administration. Through job evaluation (discussed in Chapter 12), jobs in an organization can be compared with each other and differential levels of pay established for jobs calling for greater or lesser skills. Basic to evaluating and comparing jobs for wage and salary purposes is a clear statement of what each job entails.
Finally, job analysis has become increasingly important as the federal government has sought to compel firms to end discriminatory hiring, promotional, wage and salary, and other personnel practices. For example, accurate job descriptions may represent a prime defense against charges of discrimination by proving that a woman performing one job and being paid less than a man performing another is really working at a different skill level. As a consequence, organizations may be able to defend themselves against charges that the woman is being discriminated against on the basis of her sex as prohibited by the Equal Pay Act of 1963.
Undertaking Job Analysis
There are four basic techniques generally used for gathering information about different jobs: (1) interviews, (2) observation, (3) questionnaires, and (4) the use of diaries or logs. Each of these four different techniques possesses certain advantages and disadvantages for organizations seeking to analyze jobs.
Interviews In some cases, job analysts may interview the employee who is performing the job, the supervisor, or both. This technique may be timeconsuming, and the danger exists that employees may exaggerate the importance of their jobs. In addition, the persons interviewed may forget certain duties or responsibilities which are an important part of the job, but which are undertaken on an infrequent basis. For example, an assembly line worker may also be required to inventory supplies on a monthly basis. Although this responsibility may be extremely important, it may be overlooked during the interview since it occurs on an infrequent basis.
Observation A second approach to information gathering in job analysis is having the analyst actually observe the individuals performing a job and record observations while doing so. In some instances this method is very useful, but under certain condi